The West’s private forests are on the
auction block, pitting forest communities against developers in a
red-hot real estate market

GLENWOOD,
Washington — Jay McLaughlin ambles into the Shade Tree Inn,
beams a smile to the waitress, and folds his 6-foot-9-inch frame
into a chair. Inches above his head hangs a hornet’s nest the
size of a Pilates ball, scavenged from the nearby woods. Replicas
of local cattle brands decorate the restaurant walls in incongruous
combination with brightly painted kachina dolls.

At the
next table, three men in plaid shirts, chaps and spurs gulp down
mushroom burgers. McLaughlin, 33, chats with a retired log-skidder
operator in an orange Kubota tractor cap and a beefy man wearing
suspenders that say "woods logger."

Outside,
mud-spattered pickup trucks are parked at odd angles in the gravel
in front of the Shade Tree, the only restaurant open in
Glenwood’s one-block business district.

Glenwood,
population 500, is a Western working town. Nestled in a broad
valley 30 miles north of the Columbia River, the community is a mix
of loggers, ranchers and Yakama Indians, whose sovereign lands
extend east across the Klickitat River to the Yakima Valley. Kids
growing up here learn how to fell trees and call coyotes, where to
hunt in autumn and how to fix tractors.

In mid-November,
the fields that spread out beyond downtown are empty of all but
seed-potato stubble and grazing Angus. A month ago, the clanging of
antlers rang through the valley as bull elk battled for harems.
Today, the only sound is the wind soughing through the pine and
Douglas fir forests that rise in a thick green canopy to the
Cascade peaks ringing Glenwood Valley. Towering above them is Mount
Adams, snow-capped and shrouded in gossamer clouds.

McLaughlin, a Yale-educated forester, fears this bucolic tapestry
is on the verge of unraveling. The private forests that dominate
the hillsides are up for grabs — along with virtually every
other timber industry-owned stand in America.

While
environmentalists have been occupied with controversies over the
management of public forests throughout the West, America’s
industrial forest owners have been quietly selling out. More than
half of the nation’s 68 million acres of private industrial
timberland has changed hands since 1995. Most of the sales were in
the last five years, when ownership shifted on a total area of land
larger than the state of Pennsylvania. In the West, where private
forests cover 30 percent of the land, timber companies are selling
off their holdings in blocks bigger than most national parks.

The pace of buying, selling and reselling timberlands is
unprecedented, astonishing even to investors who keep a close eye
on the market. "Never has this much land been for sale in the
United States of America. It’s phenomenal," says Peter Stein,
a manager with Lyme Timber Company.

Every sale carves off
a chunk of the nation’s working forests. Most of the pieces
are destined for development: shopping malls, parking lots,
trophy-home ranchettes and exclusive resorts. Scientists estimate
that industrial and nonindustrial woods alike are disappearing at
the astonishing rate of 1 million acres a year. A U.S. Forest
Service report predicts that over the next 30 years, housing and
other development will spread across private forests totaling the
size of the state of Washington.

And far more is at stake
than trees. Forest fragmentation will put 340 animal species at
risk of extinction — 20 percent of the total number of
species that depend on forests for their survival, according to a
2005 National Science Commission study. It will affect the 180
million people who depend upon private forest watersheds for their
drinking water. Even the climate is in jeopardy: With every acre
lost, the carbon stored in trees declines and more is released into
the atmosphere, where it contributes to global warming.

Dire as it is, this wholesale transfer of timberlands offers
enormous opportunities. Suddenly, entire landscapes are on the
market. Rural communities see a chance to buy up and manage the
land their economies depend on. Many of these communities are
teaming up with conservationists, who see a chance to protect
unique ecosystems and endangered species.

McLaughlin
wants Glenwood to be among those communities. He is working with a
group of locals on a grand plan to acquire as much as 80,000 acres
of timberland. The land would be managed as a working forest, where
logging would continue to contribute to the local economy, where
locals could continue to hunt, fish and cut firewood, and where the
valley’s wildlife could thrive.

To do this,
however, McLaughlin and his allies will have to navigate a steep,
winding road, and gain the support of not only their community but
a host of powerful and well-connected outside players. They will
also have to compete in a real estate economy where timberlands
have become lines on investment portfolios, rather than landscapes
to be cared for and sustained.

A new breed of
forest owner

So far, the more than 80,000 acres of
private industrial timberland surrounding Glenwood have remained
relatively intact — but they are part of the red-hot real
estate market nonetheless. In the past five years, the land has had
four owners, a swift succession that runs from Champion
International to International Paper to Rainier Timber Company to
Hancock Timber Resource Group. The sale to Hancock, a Boston-based
subsidiary of a mammoth insurance company, is so recent that
Rainier’s corporate sign still graces the timber company
offices at the edge of town.

The changes in ownership
have taken a toll on Glenwood. Throughout much of the 1990s,
private-land logging insulated the community from declining timber
harvests on the national forests (HCN, 9/27/04: Life after old
growth). Although timber jobs fluctuated with the market, locals
could count on first crack at whatever was available. But the
recent ownership merry-go-round has thrown everything out of
kilter. Foresters who once enjoyed steady work must reapply to each
new owner. Loggers who have dedicated decades to the local woods
face constant uncertainty.

Darrel Spies, owner of a
Glenwood logging company, has had enough work to keep 30 employees
busy during most of his three decades in Glenwood. Lately, however,
he has been forced to sell off skidders and other logging
equipment. "It’s hard to keep guys working steady with all
the ownership changes," he says.

The new owners have
brought in outside workers and are selling logs wherever they can
get the best price, Spies says. "There’s no loyalty anymore.
They don’t seem to care about the woods or anything else.
We’re just a number to them."

Past forest owners
did their share of damage to local ecosystems, building roads,
spoiling streams and clear-cutting patches as big as state law
allows. With their corporate counterparts nationwide, they were
part of managing America’s 68 million acres of industrial
timberlands to maintain a continuous flow of materials to their
mills. Throughout a century of frequent controversy, these
industrial giants ran integrated operations that grew trees,
harvested and processed them.

But the new owners belong
to a different breed entirely. Instead of producing sawlogs and
pulp over the long haul, their sole aim is to maximize short-term
profits for investors. Known as timber investment management
organizations (TIMOs), they cut their forests fast and hard. Then,
once the trees are gone, they put the land up for sale, seeking
maximum prices. In today’s soaring real estate market, the
most obvious profits are in what is euphemistically known as
"highest and best use" — development.

In 1990,
there were two or three TIMOs in the United States. Today, there
are 24, managing timberlands valued at $15.7 billion. The new owner
of the land around Glenwood, Hancock Timber Resource Group, is the
largest, with more than 3.3 million acres of forests valued at $4.8
billion.

No one in Hancock’s Glenwood office is
available to answer questions. Brian Carmichael, a company
spokesman in Boston, can provide no information about plans for the
Glenwood tract. He will only say that as a TIMO, Hancock is
responsible for managing its clients’ investments.

But locals say Hancock’s plans are abundantly clear. Up a
maze of dirt roads outside of Glenwood, Spies and his crew of six
men are running heavy equipment in one of the company’s
120-acre logging sites. Spies calls it a "dirty clear-cut." His
directions are to fell everything but the occasional "wildlife
tree." At this rate, he predicts, logging on Hancock land will be
over in three years and Glenwood will see yet another timberlands
sell-off.

"They’re going at it really hard ...
Makes it tough for us to survive over the long haul," Spies says.

The effects of the ownership changes worry Bob Beverage,
who moved to Glenwood 20 years ago after retiring from the Navy. As
chairman of the Glenwood community council, he has tried to
convince Hancock to retain the foresters and loggers whose families
have worked in the woods for three or four generations — with
some success. Without these timber jobs, "it’s lean
pickings," says Beverage. "We’re lucky to stay ahead of the
wolf."

McLaughlin worries less about the fast-paced
cutting than about what may follow it. As aggressively as timber
companies have harvested their lands, they have always maintained
them as working forests. Even clear-cut woods retain the potential
to produce sawlogs, host wildlife and provide recreation. Given
enough time, most clear-cuts can be restored to their natural
biodiversity. Once the land is carved into home sites and
ranchettes, however, that potential is gone for good.

A goal for Glenwood

Lean, lanky and quick to
laugh, Jay McLaughlin grew up in the Seattle area, where he watched
dairy farms disappear under sprawling subdivisions. After
graduating from Whitman College in Washington, he and his wife
spent two years as Peace Corps volunteers in a remote village 12
hours from Panama City, Panama. They moved to Glenwood in 1998 to
teach the community’s 120 students.

It was love at
first sight, McLaughlin says. There were salmon in the streams and
wildlife in the woods. And there was still the hope that the local
people could manage the natural resources in a way that would
sustain their community for generations to come, he says.

When the McLaughlins left in 2000 for Yale, where Jay earned a
master’s degree in forestry, no one expected them to come
back. But the first job offer Jay got was in Glenwood, working as a
forester for the Bureau of Indian Affairs. "It was fate," he says
with a broad grin, between bites of the Shade Tree’s chili
and cornbread.

By the time the McLaughlins returned,
however, many other residents had departed in search of the
economic stability Glenwood no longer offered. Along with rusting
equipment and buildings ready to collapse, they left behind a rash
of struggling businesses. The school had dwindled to 80 students.
Around the valley, locals were muttering about Glenwood’s
last gasps.

"When you lose one person, you also lose a
school board trustee or a basketball coach. Everyone does so much
here," says McLaughlin, who was elected to the community council in
2002.

Unwilling to watch the community fall apart,
McLaughlin gathered a group of local leaders and formed the Mount
Adams Resource Stewards (MARS). They began discussing everything
from how they could save local jobs to where the global economy
might lead Glenwood. Then they adopted a set of goals designed to
promote the community’s long-term health through careful
stewardship of local natural resources.

MARS’
mission is about more than jobs. Sound forest management would
maintain healthy natural systems and restore damaged areas,
McLaughlin says. Glenwood enjoys the unique biodiversity of a
transition zone, where the wet ecosystems west of the Cascades
mingle with the drier east-side species. Greater sandhill cranes
flock to the valley’s wetlands, the only known nesting site
in the state. A healthy population of Oregon spotted frogs, a state
endangered species, is one of just four in Washington. Cougars and
mountain goats wander in the mountains, and the valley is host to
Western toads and 165 species of birds. "There aren’t a lot
of places like this one left. It’s worth trying to protect,"
says McLaughlin.

To do that, MARS wants to buy private
forestlands for community management. Owning the Hancock land
— even a small chunk of it — would help maintain the
jobs and forest access locals have enjoyed for nearly a century.
And instead of someone in Boston or Seattle making decisions about
what happens to the land and the town, Glenwood residents would be
in charge.

"Owning land will empower this community. We
will be making decisions about what we want," McLaughlin says.

So far, MARS has taken only small steps toward buying any
land, says Jacquie Perry, co-owner of a country inn and recreation
center, and a member of the MARS board. In the last year, the group
has won several grants for around $100,000 to fund economic
development that includes processing small-diameter logs.

"That’s small potatoes, but at least it’s a place to
start while we build credibility," Perry says.

Hope and heartbreak

The MARS proposal may seem
like pie in the sky, but other communities have achieved similar
goals. In Montana’s Blackfoot Valley, just west of the Rocky
Mountain crest, a broad-based citizens’ coalition is
protecting the landscape surrounding the Blackfoot River, made
famous by Norman Maclean’s novel, A River Runs
Through It. The nonprofit Blackfoot Challenge began over
25 years ago with a bootstrap effort to safeguard alfalfa and
cattle operations from strip malls and trophy homes. Today, this
alliance has protected 90,000 acres of land from development, using
conservation easements, and restored 47 miles of stream, 2,600
acres of wetlands and 2,300 acres of native grasslands.

In 2003, Plum Creek Timber Company announced plans to sell 88,000
acres of cutover forestland above the Blackfoot Valley. With the
help of The Nature Conservancy and other partners, the Blackfoot
Challenge is now facilitating the purchase of that land — at
a price, so far, of $32 million. Some of the land will be sold to
local ranchers, with conservation easements restricting
development. Some will be sold to public agencies to preserve
wildlife habitat and recreational access. A 5,600-acre hillside of
bunchgrass prairie will be protected as a "community conservation
area," owned and managed by Blackfoot residents. They plan to
restore its native grasses while using it for recreation and
sustainable grazing.

Teaming up with outside
environmental groups was not always an obvious solution for the
Blackfoot ranchers. Everything the Challenge does is founded in the
belief that local people who love the land are its best stewards.
But in addition to the risk of development, locals face threats
ranging from global competition to short growing seasons. They
realized they needed the conservation community for the economic
programs and funding it offers.

Today, the Challenge has
established partnerships with 14 conservation groups, as well as
with 36 government organizations, four private corporations, nine
foundations, and 500 private landowners. The alliance of diverse
interests has helped win crucial support from Sen. Conrad Burns,
R-Mont., who has been key to securing federal funding for easements
and other conservation programs. The Blackfoot Challenge now
manages a $2.8 million annual budget.

Eventually, the
group wants to protect everything within the ridges that ring the
Blackfoot Valley — the entire 1.5 million-acre watershed.
"This is all about what communities can do — for themselves
and the land," says Jim Stone, Blackfoot Challenge board chairman.

Whether the Challenge will be able to protect the
Blackfoot’s still spacious landscape into the future is an
open question. Some ranchers are challenging local zoning
regulations that prohibit most land divisions under 160 acres.
Almost everyone is worried about skyrocketing property values. The
very successes that local ranchers have earned in preserving their
land and lifestyle may contribute to pricing out the next
generation — exiling Blackfoot children from their own
valley.

And for every community that has successfully
protected its working landscape, dozens more are still struggling.
Not all of them succeed.

Take Roslyn, Wash., a
picturesque town just east of the Cascades that was immortalized as
the set for TV’s "Northern Exposure." In 1988, a rumor began
to circulate that Plum Creek planned to clear-cut the 150,000-acre
forest that dominated both the local economy and the view from
town. Concerned citizens formed a nonprofit, which they called
RIDGE after the mountain crest that unites the community. They
developed a plan to maintain the timberlands surrounding Roslyn as
a working forest that would create "a living envelope," providing
jobs as well as protecting and enhancing wildlife habitat.

But Plum Creek had other ideas about the "highest and
best use" of its Roslyn lands. It began cutting heavily across the
ridge, out of sight of major tourist routes. That launched a battle
that raged through the 1990s, pitting RIDGE against "the Darth
Vader of corporate America," says Peg Bryant, an occupational
therapist who helped found the organization. RIDGE sponsored town
meetings, attended county planning sessions, and served as a
citizens’ advisory committee to the city. The group’s
goal was to create an 8,000-acre corridor stretching from ridge to
ridge above the Cle Elum River.

Eventually, the issue
landed before a state panel responsible for growth management
decisions. RIDGE suffered a crushing defeat when the board allowed
development on Plum Creek’s timberlands, paving the way for
the sale of 7,000 acres for a high-end resort with three golf
courses and up to 3,775 residences. Wielding a lawsuit, RIDGE
managed to delay the construction for four years, but ultimately
settled out of court for $500,000, which it put toward purchasing
323 acres of forest above Roslyn.

Cordy Cooke, an
urgent-care nurse and RIDGE activist, points out that the
settlement also guarantees free public access to the Cle Elum
River, hiking trails, labor standards for resort employees, traffic
improvements, wildlife protections and limits to both the size and
number of entrances to the resort and the number of residences. "We
forced a multinational development corporation to make a serious
effort at mitigation," says Cooke.

But 323 acres of
woodsy landscape is a far cry from an 8,000-acre working forest.
And the process was deeply divisive: RIDGE members were ostracized,
and taunted at public meetings. The personal toll was too much for
Hank Fraser, a fisheries biologist who dropped out when it became
clear that the resort would be built. "I figured the argument would
be over how many flowers we could plant. We had lost sight of the
big picture," Fraser says. "It was a heartbreaker."

The challenge for communities

The inevitable
failures have not dissuaded many Western communities from fighting
for control of private timberlands. In Montana’s Swan Valley,
Plum Creek’s announced sale of 10,000 acres for real estate
development has generated a campaign to buy land for community
management that protects the timber-based economy and public
access. Near Bend, Ore., the Deschutes Basin Land Trust is trying
to purchase nearly 33,000 acres of working forest. If they are
successful, these groups will join 3,000 communities nationwide
that own a total of 4.5 million acres of forestland.

But
they are entering a tough, aggressive market. To be competitive,
they need new attitudes, new allies and new financial tools, says
Tom Tuchmann, president of U.S. Forest Capital in Portland. "This
is the world of Wall Street. It’s way beyond bake sales."

Federal funding for conservation purchases has seen a
serious decline in recent years. Last year, existing programs
provided a mere $314 million to buy parks, forest, wildlife refuges
and shorelines (HCN, 5/2/05: As threats loom, conservation dollars
disappear). But on the state and local levels, voters have approved
major conservation funding initiatives in recent years. In 2004,
voter-approved ballot initiatives made $4.1 billion available to
create parks and preserve farmlands and forests.

Conservation groups, too, have stepped up, becoming one of the top
four land buyers in the country in the last two years. Sometimes,
they purchase the tracts outright. In other cases, they help cities
and community groups buy land, holding it until it can be
transferred to local ownership. Most of these acquisitions include
conservation easements, which limit development but often allow
timber harvesting and other management activities.

Tuchmann is one of a growing group of environmental entrepreneurs
and investment bankers who are working to increase the options for
forest communities. He designed a program, approved last year by
the Oregon Legislature, that authorizes counties and cities to
establish local "forest authorities," which can issue taxable or
tax-exempt revenue bonds. Community organizations can apply to
these authorities for funding to purchase land that will provide
environmental, social and economic benefits to the public.

In December, the Deschutes County Commissioners created
Oregon’s first community forest authority, allowing the
Deschutes Basin Land Trust to borrow municipal debt funds to
acquire the 33,000-acre Skyline Forest. The bonds will be repaid
with revenue from timber harvests.

Elsewhere, local,
regional and national land trusts are forming joint ventures with
private investors in order to assemble the capital to bid on huge
land transactions. Among them are TIMOs such as Lyme Timber
Company, based in New Hampshire, which has put up millions of
dollars in private capital to make it possible for communities and
land trusts to acquire working forests. Hancock has also been
involved in several partnerships that have protected timberlands
from development. Without the private capital, most groups would
not be able to take the financial risks, says Bill Ginn, director
of The Nature Conservancy’s global forest initiative.

These partnerships raise complex questions for many
environmentalists. Some oppose any land acquisitions that require
logging to support the sale. They consider community-owned forests
a timber industry scheme that will degrade environmental
protections on valuable landscapes. Tuchmann acknowledges that
large land purchases can create pressure to harvest timber to pay
back the debt. But over time, he says, it is better to have the
land remain in working forests than be converted to development.

Communities are protecting timberlands that are part of
their own economic futures, says Ginn. "In the long run,
sustainable use must become the foundation of all communities and
not a conservation-inspired luxury."

Small
town, big dreams

In Glenwood, Jay McLaughlin rifles
through the MARS office in search of maps. The office — down
the road from the Shade Tree in a back room of the Grange Hall
— houses a cluttered collection of government documents,
treatises on forest management and strategies for land
conservation. A photocopier is jammed into one corner and a
computer dominates the only desk.

McLaughlin grabs a set
of topographic maps and strides out through the Friday-night bingo
room. Outside the Grange Hall, he carefully puts the office key on
a small marquee beside the front door — Glenwood’s
version of leaving the latchstring out. He hops in his dusty red
’98 Ford pickup and heads to the woods to visit some of the
forest parcels MARS is considering for acquisition.

The
group is looking for a few hundred acres to start with — a
spot with special significance for locals, where MARS can
demonstrate what the community can do for the forest and what the
forest can do for the community. The place could be a gateway to
Glenwood, showcasing sustainable forest management. It could be a
site treasured for its historic or aesthetic value, or a place
accessible for skiing, snowmobiling, hiking and horseback riding.

McLaughlin drives along a two-lane road past timber stand
after timber stand marked for aggressive cutting. All belong to
Hancock. The pace of Hancock’s logging infuses McLaughlin
with fresh urgency. He has contacted the Vancouver-based Columbia
Land Trust to help find and fund a suitable site, but acknowledges
that coming up with the money will be a major hurdle.

Back at the Shade Tree, the MARS community-forest project meets
with some healthy skepticism among the coffee crowd.

Beverage, the community council chairman, says local forest
ownership would be ideal, but that buying up thousands of acres
seems unlikely in an area where annual income averages between
$20,000 and $30,000. "I doubt there’s that much money to
accomplish something like that," he says.

"Very noble ...
but a long, long reach," says Jerry Lorenz, co-owner of the
restaurant and the Shade Tree Motel. As a former forester, Lorenz
is not persuaded by arguments touting the benefits of a
community-owned forest. Since he moved to Glenwood in 1967, Lorenz
has watched Champion close its woods operations, shut down its
sawmill, and then sell the forest to International Paper. The town
has been dying ever since, he says. Last year’s high school
graduating class had 14 students. The Class of 2006 has eight.

Glenwood’s only hope is people who want to get out
of the city enough to buy the small tracts of timberland converted
for development, Lorenz says. "I’ll support anything that
will keep our town vital, but we need something right now, not when
Jay’s son is my age."

McLaughlin is looking further
ahead. He has seen the excitement of Glenwood students when they
understand the link between forest health and salmon. He admires
the pride loggers like Spies take in their work. He has felt the
inspiration that comes when a community works together for a common
goal. McLaughlin is convinced the community will survive, even
thrive, if it can retain its working forest.

On the drive
back into town, a full moon rises over the valley as the setting
sun streaks the snowcap of Mount Adams with orange and rose.
"I’m a dreamer," McLaughlin says. "Special places don’t
stay special by accident. We’re going to put together a
future for a valley we’d be happy to live in."

Jane Braxton Little is a freelance writer based in Plumas
County, California.

More from Wildlife

As one of the co-authors of the Forests on
the Edge study referenced in Timberlands up for Grabs and a close
follower of land ownership changes occuring to this nation's
private forestlands, I want to applaud Jane Braxton Little for
writing such a comprehensive article and HCN for publishing it as
the lead story. The change in ownership of America's private
timberlands from traditional industrial timber companies to
investment firms has substantial and far reaching consequences.
What's more significant, however, is how grossly under-reported and
misunderstood this issue really is.

The rise of
Timber Investment Management Organizations (TIMOs), Real Estate
Investment Trusts (REITs), and timberland investment-based LLCs has
completely changed the market forces that govern timberland
management and ownership. The article does a great job of
illustrating what this means at the local level when traditional
timber businesses yield to shareholder-driven investment firms, but
the larger picture of what this means at a national scale is still
out of focus.

For example, traditional timber
companies sold an average of 1 percent of their land a year for
development. To my knowledge, we don't know the average yearly
percent of timberlands converted to developed uses (or protected
uses for that matter) by TIMOs, REITs, and LLCs. Besides anecdotal
information or studies on specific areas, there is also no good
information about how the takeover of timber investment
organizations has resulted in changes to forest
management.

This is important, because as
illustrated by the article it is difficult for small traditional
timber communities to affect change on their own. More information
is needed at the national level to better understand the scope and
magnitude of the problem. Only then can this change be understood
by the public and good solutions be created and put to use.

Tom Tuchmann's work with US Forest Capital is a
good example. Since 2001 US Forest Capital has been working with
Congress to pass a bill allowing communities to buy and manage
timberlands up for sale through the use of tax-exempt revenue bond
financing (similar to the Oregon state law which permits this).
Communities use bond financing to build airports, hospitals, sewer
systems, and several other types of public works; so why not local
forestlands?

It seems straight-forward enough,
but Congress has yet to pass any bills authorizing community
forestry bonds. There is simply no convincing information of how
private timberland is changing nationally and what effects it will
have on small communities and more importantly, the constituencies
that lie within.

I clearly understand that
housing is a necessity (I live in one myself) and all houses must
be built somewhere. Yet I also understand the need to manage our
resources wisely. Conversion of some of our nation's most
productive forestlands can have severe economic, social, and
ecologic consequences. The best way to manage ownership changes in
our nation's private timberlands is to first work towards
understanding them.